66. Magbanua vs.

Uy

Facts:
A decision was promulgated awarding to the petitioners the amount of 1,487,312.69php as backwages. Petitioners
filed a Motion for Issuance of Writ of Execution. Rizalino Uy filed a manifestation that the cases be terminated and closed,
stating that the judgment award as computed has been complied with to the satisfaction of the petitioners. The said
manifestation was signed by the petitioners. Together with the manifestation is a joint affidavit attesting to the receipt of
payment from the respondent and waiving all other benefits due them in connection with their complaint.
The respondent opposed the motion on the ground that the judgment award had been fully satisfied. In reply,
petitioners claim that they received only partial payments of the judgment award.
6 of the 8 petitioners filed a manifestation requesting that the cases be considered closed and terminated as they are
already satisfied of what they have receieved from the respondent. Together with said manifestation is a joint affidavit on the
local dialect of the 6 petitioners attesting that they have no more collectible amount from the respondent and if there is any,
they are abandoning and waiving the same.
The Labor arbiter issued an order denying the motion for issuance of writ of execution. The NLRC reversed, holding
that a final and executor judgment can no longer be altered and that quitclaims and releases are normally frowned upon as
contrary to public policy.
CA held that compromise agreements may be entered into even after a final judgment, thus petitioners validly released
respondents from any claims.

Issue:

Whether the final and executor judgment of the Supreme Court could be subject to compromise settlement

Whether the petitioners’ affidavit waiving their awards in the labor case executed without assistance of their counsel
and labor arbiter is valid

Held:
Both in the affirmative. A compromise agreement is a contract whereby parties make reciprocal concessions in order
to resolve their differences and thus avoid or put an end to a law suit. The Court noted that Article 2040 impliedly allowed such
agreements; there was no limitation as to when these should be entered into. There is no justification to disallow a
compromise agreement, solely because it was entered into after final judgment. The validity of the agreement is determined by
compliance with the requisites and principles of contracts, not by when it was entered into.
As provided by the law on contracts, a valid compromise must have the following elements: (1) the consent of the
parties to the compromise, (2) an object certain that is the subject matter of the compromise, and (3) the cause of the
obligation that is established.
The principle of novation supports the validity of a compromise after final judgment. Novation, a mode of
extinguishing an obligation, is done by changing the object or principal condition of an obligation, substituting the person of
the debtor, or surrogating a third person in the exercise of the rights of the creditor. For an obligation to be extinguished by
another, the law requires either of these two conditions: (1) the substitution is unequivocally declared, or (2) the old and the
new obligations are incompatible on every point. A compromise of a final judgment operates as a novation of the judgment
obligation, upon compliance with either requisite. In the present case, the incompatibility of the final judgment with the
compromise agreement is evident, because the latter was precisely entered into to supersede the former.
The presence or the absence of counsel when a waiver is executed does not determine its validity. There is no law
requiring the presence of a counsel to validate a waiver. The test is whether it was executed voluntarily, freely and intelligently;
and whether the consideration for it was credible and reasonable.
67. MINDORO LUMBER AND HARDWARE vs.EDUARDO D. BACAY, et. al G.R. No. 158753, 8 June 2005

FACTS:

The private respondents executed a Sama-samang Salaysay sa Pag-uurong ng Sakdal (Joint Affidavit of Withdrawal of Co
mplaint), declaring therein that by virtue of the amount each of them received (which amount was either P3,000.00 or P6,
000.00 per employee), they were withdrawing their claim against Mindoro Lumber. Their counsel then filed a motion to d
ismiss. The private respondents said that Bacay persuaded them to execute the JAWC. They were then withdrawing the sai
d JAWC for the amount was grossly disproportionate to their entitlement under the law, and were authorizing Lanot, the n
ew president, to pursue their claim. Lanot then filed a motion before the DOLE-RO, praying that the employees be paid th
e amounts due to each of them, and that the said JAWC be declared null and void. The RD dismissed the case while the D
OLE-Sec granted it and remanded the case to the DOLE-RO which issued writ of execution.

ISSUES: 1.) Whether or not the Sama-samang Salaysay sa Pag-uurong ng Sakdal constitutes a valid compromise agreemen
t considering it was not assisted by the BLR or the Regional Office of DOLE; and 2.) Whether or not the acknowledgment o
f the respondents that they each received the amount of either P3,000.00 or P6,000.00 embodied in the said Salaysay con
stitutes a valid quitclaim considering that the individual claims are ranging from P6,744.20 to P242,626.90.

RULING: 1.) No. The petitioner points out that while the Sama-samang Salaysay sa Pag-uurong ng Sakdal was executed wi
thout the assistance of the Bureau of Labor Relations (BLR) or the DOLE Regional Office, the November 4, 1999 Order of t
he Regional Director in Case No. LSED-RO400-9807-CI-001 nonetheless shows that when Eduardo Bacay appeared befor
e the said office, he was assisted by counsel. The assistance of the BLR or the regional office of the DOLE in the execution o
f a compromise settlement is a basic requirement; without it, there can be no valid compromise settlement. In this case, th
e petitioner admits that the purported compromise settlement was executed by the private respondents without such requi
red assistance. The closest form of assistance adverted to by the petitioner in this case was that of Bacay’s counsel when th
e latter appeared before the Office of the Regional Director to file the following: the Sama-samang Salaysay sa Pag-uurong
ng Sakdal executed by the private respondents; a Sinumpaang Salaysay executed by Bacay withdrawing the complaint; an
d the Motion to Dismiss. Such assistance, however, is not the “assistance” required by Article 227. As such, the Sama-
samang Salaysay sa Pag-uurong ng Sakdal executed by the respondents cannot qualify as a valid compromise settlement.

2.) No. The petitioner is correct in saying that there are legitimate waivers that represent a voluntary and reasonable settle
ment of a worker’s claim which should be respected by the courts as the law between the parties. Indeed, not all quitclaims
are per se invalid or against public policy, except (1)where there is clear proof that the waiver was wangled from an unsusp
ecting or gullible person, or (2) where the terms of settlement are unconscionable on their faces; in these cases, the law wil
l step in to annul the questionable transactions. Such quitclaims are regarded as ineffective to bar the workers from claimi
ng the full measure of their legal rights.

In the case at bar, the private respondents’ individual claims, ranging from P6,744.20 to P242,626.90, are grossly disprop
ortionate to what each of them actually received under the Sama-samang Salaysay sa Pag-uurong ng Sakdal. The amount o
f the settlement is indubitably unconscionable; hence, ineffective to bar the workers from claiming the full measure of thei
r legal rights.

68. EDI-STAFF BUILDERS INTERNATIONAL INC vs NLRC

In 1993, EDI-Staffbuilders, Inc. (EDI), upon request of Omar Ahmed Ali Bin Bechr Est. (OAB), a company in Saudi Arabia,
sent to OAB resumes from which OAB can choose a computer specialist. Eleazar Gran was selected. It was agreed that
his monthly salary shall be $850.00. But five months into his service in Saudi Arabia, Gran received a termination letter
and right there and then was removed from his post. The termination letter states that he was incompetent because he
does not know the ACAD system which is required in his line of work; that he failed to enrich his knowledge during his 5
month stay to prove his competence; that he is disobedient because he failed to submit the required daily reports to OAB.
Gran then signed a quitclaim whereby he declared that he is releasing OAB from any liability in exchange of 2,948.00
Riyal.
When Gran returned, he filed a labor case for illegal dismissal against EDI and OAB. EDI in its defense averred that the
dismissal is valid because when Gran and OAB signed the employment contract, both parties agreed that Saudi labor
laws shall govern all matters relating to the termination of Gran’s employment; that under Saudi labor laws, Gran’s
termination due to incompetence and insubordination is valid; that Gran’s insubordination and incompetence is outlined in
the termination letter Gran received. The labor arbiter dismissed the labor case but on appeal, the National Labor
Relations Commission (NLRC) reversed the decision of the arbiter. The Court of Appeals likewise affirmed the NLRC.
ISSUE: Whether or not the Saudi labor laws should be applied.
HELD: No. The specific Saudi labor laws were not proven in court. EDI did not present proof as to the existence and the
specific provisions of such foreign law. Hence, processual presumption applies and Philippine labor laws shall be used.
Under our laws, an employee like Gran shall only be terminated upon just cause. The allegations against him, at worst,
shall only merit a suspension not a dismissal. His incompetence is not proven because prior to being sent to Saudi Arabia,
he underwent the required trade test to prove his competence. The presumption therefore is that he is competent and that
it is upon OAB and EDI to prove otherwise. No proof of his incompetence was ever adduced in court. His alleged
insubordination is likewise not proven. It was not proven that the submission of daily track records is part of his job as a
computer specialist. There was also a lack of due process. Under our laws, Gran is entitled to the two notice rule whereby
prior to termination he should receive two notices. In the case at bar, he only received one and he was immediately
terminated on the same day he received the notice.
Lastly, the quitclaim may not also release OAB from liability. Philippine laws is again applied here sans proof of Saudi
laws. Under Philippine Laws, a quitclaim is generally frowned upon and are strictly examined. In this case, based on the
circumstances, Gran at that time has no option but to sign the quitclaim. The quitclaim is also void because his separation
pay was merely 2,948 Riyal which is lower than the $850.00 monthly salary (3,190 Riyal).

69. ARELLANO et al, vs. POWERTECH

G.R. No. 150861

FACTS: The case stems from a complaint for illegal dismissal and other money claims filed by the Nagkakaisang Manggagawa Ng
Powertech Corporation in behalf of its individual members and non-union members against their employer, Powertech.
The Labor Arbiter rendered a Decision declaring illegal the termination of 20 of petitioners and granting their monetary claims of
2.5M. Powertech appealed to the NLRC.
During its pendency, Gestiada, for himself and on behalf of other petitioners, executed a quitclaim, release and waiver in favor of
Powertech in consideration of 150k. (Earlier, Gestiada was appointed by his co-petitioners as their attorney-in-fact. The appointment
was evidenced by an SPA.) The compromise amount was paid to Gestiada by check.
Relying on the quitclaim and release, Powertech filed a motion for the withdrawal of the appeal and cash bond. The NLRC granted the
motion, dismissed the appeal and ordered the release of the cash bond.
The check of Gestiada, however, bounced due to a stop payment order of Powertech.
Aggrieved, petitioners moved to nullify the release and quitclaim for lack of consideration. In a Resolution, the NLRC declared the
quitclaim, release and waiver void for lack of consideration, reinstated the appeal and ordered Powertech to post a cash or surety
bond for the monetary judgment less the amount it had previously posted.
Then, Gestiada terminated the services of their counsel, Atty. Evangelista and, instead, retained Atty. Felipe of the Public Attorney’s
Office.
A day later, Powertech paid 150k to Gestiada purportedly as compromise amount for all of petitioners. That same day, Gestiada,
through Atty. Felipe, and Powertech filed a joint MTD with the NLRC based on the compromise agreement. Atty. Evangelista opposed
the motion, alleging that the compromise agreement is unconscionable, that he was illegally terminated as counsel for the other
petitioners without their consent, and that the 150k was received by Gestiada as payment solely for his backwages and other
monetary claims.
The NLRC issued a resolution denying the joint MTD. In denying the joint motion to dismiss, the NLRC held that the amount received
by Gestiada did not cover the monetary claim of petitioners against Powertech. For failure of Powertech to post the required cash or
surety bond, the NLRC ruled that the Labor Arbiter decision had attained finality.
Undaunted, Powertech elevated the matter to the CA via petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.
The CA rendered a decision in favor of Powertech, ordering that the Resolution of the NLRC declaring the Quitclaim and Release void
ab initio and denying the Joint MTD and dismissing the appeal of the petitioners is ANNULLED and SET ASIDE.
The CA upheld the validity of the compromise agreement between petitioners and Powertech
Petitioners moved to reconsider the CA decision but their motion was denied. Hence, the present recourse.
ISSUE: WON THE COMPROMISE AGREEMENT IS VOID
HELD: WHEREFORE, the petition is GRANTED. The Decision of the CA is REVERSED and SET ASIDE. The Resolution of the NLRC is
REINSTATED.
YES

We give credence to the admission of Gestiada that he received the 150k as payment for his own backwages. In his letter to Atty.
Evangelista, Gestiada said that he was pressured by Powertech to sign the waiver and quitclaim for petitioners in order to receive his
share in the P2.5 million judgment. Having no stable job after his dismissal, Gestiada had no other choice but to breach his fiduciary
obligation to petitioners. He succumbed to the pressure of Powertech in signing the waiver, release and quitclaim in exchange for the
150k. In short, he colluded with Powertech to the detriment of petitioners.
Powertech knew that Gestiada had plenary authority to act for petitioners in the labor case. It had prior dealings with him. It also
knew that Gestiada was authorized to negotiate for any amount “he may deem just and reasonable” and to sign waivers and
quitclaims on behalf of petitioners. Powertech obviously used that knowledge, capitalized on the vulnerable position of Gestiada in
entering into the agreement and took advantage of the situation to the disadvantage of petitioners.
To give effect to the collusion, Gestiada had to get rid of Atty. Evangelista, who had previously succeeded in nullifying the
compromise agreement. He fired Atty. Evangelista without cause basing his dismissal on his plenary authority as agent of
petitioners. He then procured the services of another lawyer, Atty. Felipe.
In line with Our conclusion that Powertech colluded with Gestiada, the CA gravely erred in upholding the compromise agreement. The
appellate court decision was premised on the compromise agreement being entered into by Powertech and Gestiada in good faith. It
is now clear that there is ample evidence indicating that Powertech was negotiating in bad faith and, worse, it colluded with Gestiada
in shortchanging, nay, fraudulently depriving petitioners of their just share in the award.
Collusion is a species of fraud. Article 227 of the Labor Code empowers the NLRC to void a compromise agreement for fraud, thus:
Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance
of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties. The National Labor
Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof
or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion.[28] (Underscoring
supplied)
In fine, We find that the CA erred in upholding the compromise agreement between Powertech and Gestiada. The
NLRC justifiably declared the compromise agreement as void.
NOTES:
Addressing petitioners’ contention on the failure of Powertech to post a surety bond, We agree with the NLRC resolution dismissing its
appeal. Said the NLRC on this point:
An appeal is neither a natural right nor is it part of due process but purely a statutory privilege and may be exercised only in the
manner and in accordance with the provisions of law x x x Considering that the Joint MTD remains unacted upon at the time
respondents received a copy of Our Resolution… respondents, in accordance with said Resolution and with Article 223 Labor Code
and with Section 6, Rule VI, NLRC New Rules of Procedure should have posted a cash and surety bond. Hence failing to do so the
appealed Decision is deemed final and executory…
The posting of a surety bond is mandatory and jurisdictional.
70. GOODRICH MANUFACTURING CORPORATION vs. EMERLINA ATIVO, et. al G.R. No. 188002, 1 February 2010

FACTS:

On account of lingering financial constraints, Goodrich gave all its employees the option to voluntarily resign from the co
mpany. Several employees, including respondents, decided to avail of the voluntary resignation option. Respondents were
paid their separation pay and executed their respective waivers and quitclaims. The following day, some of Goodrich’s for
mer employees, including herein respondents, filed complaints against Goodrich for illegal dismissal with prayer for paym
ent of their full monetary benefits before the NLRC. Despite several conferences, no amicable settlement was reached by t
he parties. Labor rendered a Decision declaring that there was no illegal dismissal but held that petitioners were still liabl
e to the respondents for their unpaid emergency cost of living allowance (ECOLA), 13th month pay, and service incentive l
eave (SIL) pay.

ISSUE:

Whether or not respondents may still receive the deficiency amounts due them considering the release, waiver and quitcla
im signed by them.

RULING:

The Court has given effect to quitclaims executed by employees if the employer is able to prove the following requisites, to
wit: (1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the partie
s; (3) the consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public order
, public policy, morals or good customs, or prejudicial to a third person with a right recognized by law.

In a comment, respondents themselves admitted that they were not coerced to sign the quitclaims. They, however, maintai
n that two (2) reasons moved them to sign the said documents: first, they believed Goodrich was terminating its business o
n account of financial hardship; and second, they thought petitioners will pay them the full amount of their compensation.

The Court is not persuaded. First, the contents of the quitclaim documents that have been signed by the respondents are si
mple, clear and unequivocal.Second, respondents claim that they were deceived because petitioners did not really termina
te their business since Mr. Chua Goy had set up another company with the same line of business as Goodrich. Such conten
tion, however, was not proven during the hearing before the Labor Arbiter and the NLRC. And third, the considerations re
ceived by the respondents from Goodrich do not appear to be grossly inadequate vis-à-vis what they should receive in full
because the amount computed by the Labor Arbiter was even lesser.